N.Y. law firm seeks lead spot in Swisher Hygiene litigation

While investors await financial restatements from Swisher Hygiene, a May 29 motion in federal court sought to appoint New York-based law firm Levi & Korsinsky as the lead counsel in a class action lawsuit.

Avron B. Fogelman, a prominent Memphis businessman, is being proposed by the firm as the lead plaintiff in the case, which has drawn interest from numerous law firms that specialize in securities litigation.

On May 17, Charlotte, N.C.-based Swisher said its audit committee substantially completed the investigative portion of its internal review and was working with outside professionals and an independent auditor to finalize adjustments for the first three quarters of 2011.The company has tentatively identified $4.6 million in restatements.

Once the numbers are finalized, it is likely Swisher will be talking to its insurers about settling the class action case, which is what typically happens in these types of situations.

In the mean time, Levi & Korsinsky appears to have lined up a strong lead plaintiff, who invested $276,850 in the company.

The documents in the case don’t fully identify who Fogelman is, but the sizeable amount of his investment and his relatively unusual name indicates he’s the Avron Fogelman who was president of Fogelman Properties, a Memphis company that calls itself one of the nation’s largest privately owned operators of multifamily apartment communities.

The company has more than 500 employees and a portfolio of 60 apartment communities with about 20,000 units and a value of $1.5 billion, the company website says. The company is currently led by CEO Richard Fogelman. (I left messages seeking comment from Avron Fogelman and Levi & Korsinsky partner Nicholas I. Porritt.)

Fogelman willing to testify

As lead plaintiff, Fogelman has expressed his willingness to provide testimony at a deposition and at trial, if necessary.

The allure of Fogelman as a lead plaintiff is pretty clear: He’s a sophisticated investor with decades of business experience and undoubtedly understands accounting, which is where Swisher has encountered problems. His pattern of continued buys at lower prices also indicates he had confidence in management before the restatement announcement.

The exhibit indicates Fogelman made an initial purchases of 15,000 shares at $8.62 a share on May 2, 2011, after Swisher peaked at $11.43 on April 19. On May 2, I wrote a blog post that noted skepticism about Swisher raised by the Streetsweeper website and The Wall Street Journal.

Fogelman, however, kept investing last year as Swisher shares generally drifted lower: 10,000 shares at $6.50 on May 4; 5,000 shares at $5.30 on May 5; 5,000 shares at $5.42 on May 23; 5,000 shares at $3.80 on Aug. 9; and 2,500 shares at $3.98 on Aug. 18.

Fogelman was in the news last year when he donated $1.25 million to the University of Memphis, which resulted in the naming of the Avron B. Fogelman Center for Professional Career Development, the Memphis Business Journal reported.

One of the defendants in the Swisher class action is Chairman H. Wayne Huizenga, whose name is on Nova Southeastern University’s School of Business and Entrepreneurship. Huizenga and Swisher CEO Steven R. Berrard previously teamed up at AutoNation (NYSE: AN) and Blockbuster in Fort Lauderdale, which experienced rapid growth under their leadership.

They are listed in the court docket summons list, along with former Swisher CFO Michael J. Kipp, who also has a long background with Huizenga’s companies, and former Florida Gov. Jeb Bush, who is on Swisher’s board.

Despite the legal filings and pending restatements, Swisher shares rallied after hitting a 52-week low of $1.51 on May 16 to close at $2.14 on May 29. Shares were down 19 cents, or 9 percent, to 41.95 in mid-afternoon trading on May 30.